Will Vietnam become the world’s footwear production base?
Will Vietnam become the world’s footwear production base?
Vietnam is believed to be a powerhouse in global footwear production, largely due to a number of multilateral and bilateral free trade agreements (FTAs), but many enterprises do not believe so.
Many foreign footwear companies are moving to Vietnam. Scott Thomas from the US-based Wolverine Worldwide said the enterprise is considering moving its production chains out of China, where high inflation and high minimum wages have led to higher production costs. It is moving to Vietnam because of lower production costs.
Ever Rite International, also from the US, completed the relocation of its last factory to Vietnam by September 2013.
Oliver Ng, a senior executive of Ever Rite International, noted that the company can see favorable conditions in Vietnam which may allow it to minimize production costs, including the stable dong/dollar exchange rate, low minimum wage, young population and high productivity.
According to Lefaso, foreign investors continue to flock to Vietnam, where there are 600 foreign-invested factories, holding 80 percent of the market share.
Lefaso noted that Nike, Adidas and Puma have outsourced large percentages of orders to Vietnam instead of China and Bangladesh. Meanwhile, Target Sourcing Services, one of the 10 largest distributors in the world, and Dansu group are considering expanding production capacity in Vietnam.
Timberland and Puma have returned to Vietnam. Puma has placed orders with Vietnamese producers without designating material suppliers.
Market still quiet
While the news about the presence of big foreign investors has been in the news, causing excitement, Vietnamese enterprises and state management agencies have remained calm.
Nguyen Hoang Phi Phung, deputy head of Hepza, the HCM City Industrial Zone and Export Processing Zone Management Board, said that Hepza had not granted investment licenses to any footwear producers this year.
A representative of the Taiwanese-invested Pouchen Vietnam, which does outsourcing for 20 footwear brands in the world, including Adidas, Nike, Puma and Reebok, said there had been no sign of orders increasing from foreign partners.
He said that with seven operational factories in Vietnam, Pouchen Vietnam’s production capacity is relatively big and can fulfill more orders. However, the orders remain the same, and the Pouchen’s factory in Binh Tan district of HCM City output remains unchanged at 5 million pairs a month.
Dong Hung Group, a 100 percent Vietnamese producer, has signed a contract with Puma after two years of interruption. The group, which outsources for 15 footwear brands, has 30 percent more orders compared with 2013.
